In late December 2021, a team of Faegre Drinker business litigators won an appeal at the Minnesota Court of Appeals for longtime firm client AT&T in an important case under the Minnesota False Claims Act.
The firm represents AT&T Mobility National Accounts, Inc. (AT&T) in a case brought in Minnesota state court under the Minnesota state-law analog of the federal False Claims Act (the MFCA). The MFCA deputizes whistleblowers, known as relators, to bring lawsuits seeking to recover money the government loses on account of a private actor's fraudulent or false claims. In this case, a private citizen named Richard Knudsen believed that AT&T and three other major telecommunications providers (the Carriers) fraudulently charged the State of Minnesota and various subdivisions more than the amounts set forth in contracts with the state for voice and data services. Mr. Knudsen further alleged that AT&T and the other Carriers fraudulently intended to never give the government the most favored rates given to enterprise customers. Mr. Knudsen brought a lawsuit under the MFCA, seeking to recover over $100 million in damages and other civil penalties.
AT&T and the other Carriers moved to dismiss, and a district court judge in Hennepin County agreed with AT&T's arguments, for multiple reasons. First, much of the lawsuit had been previously disclosed to the public and was barred under a provision of the MFCA known as the public disclosure bar. Second, the relator's claim was not pleaded with the particularity required for any claim sounding in fraud, including a false claims act claim. Third, Mr. Knudsen's complaint lacked critical allegations required for a MFCA case.
When the relator appealed, AT&T brought in Faegre's appellate team, who led the drafting process on behalf of all four Carriers, and presented the lead argument before the Court of Appeals.
On December 27, 2021, the Court of Appeals affirmed dismissal, holding that the relator's allegations lacked the particularity required for a false claims act case. It was not enough, the Court of Appeals held, for a relator merely to allege a breach of contract; something more is required to plausibly allege a claim under the MFCA. The case reaffirms that, like under the federal False Claims Act, the MFCA has a high bar to proceed past a motion to dismiss.